Posted on 01/23/2012 9:51:35 PM PST by CaptainK
That may be the rationale, but in practice most of the capital gains that are earned in the US are on investment money that has not been taxed in the first place. In fact with margin buying and leveraged buyouts the money that is used to purchase the stocks is borrowed money so when the capital gain is achieved it is taxed at the lower rate and the investor not only gets the advantage of the lower rate but also gets to offset the gain by the cost of the interest on the loan.
Romney has earned much of his money playing these kinds of tax avoidance shell games that are available to guys like him but are not available to guys like Joe the Plumber.
I think when his returns are scrutinized you will find that Mr. Romney's capital gains are largely on investments that were made with money that was taxed for the first time on his capital gains and dividend distributions.
Apparently one of the tactics used by Bain is to have the companies that they run borrow money to pay dividends to themselves and when the company then can't meet it's financial obligations, they send the company into bankruptcy and keep the dividend distributions.
Romney's business practices have opened my eyes to realize that there is a huge tax disparity in the treatment of people who toil and sweat for a living and those who live off the toil and sweat of others.
For instance, the machinist who has to drive 50 miles a day to earn $20 an hour to feed his family and is left with no money for investments at the end of the week and yet not only pays an effective Income Tax rate in the range of 15-20%, but also pays payroll taxes of 7-8% and has to pay 40 cents a gallon in Federal and state taxes on his commute, has to pay for his lunch at the fast food place with his after tax income, has to buy his work clothes with after tax income, has to purchase his portion of his health insurance with after tax income, while guys like Romney borrow money to make millions and pay an effective tax rate of 13% including their Social Security contributions, get all kinds of tax write offs for their vehicles, mileage, "corporate lunches", Armani business suits, etc., while basically living off the hard work of guys like the machinist mentioned above.
The system is skewed to screw the little guy. There is no question about that.
I don't know what the solution is, but I know what the problem is.
A couple points. First, Newt backed off his attack on capitalism because it was hurting him. IOW, this is a bad line of attack on Romney. Second, most employees don't want the risk of being owners (equities). They generally want to be paid a return on their labor (that's what they are selling) no matter how the business does.
Finally, it sure looks like a lot of envy that some guy has done well, been smart with his money and now when he makes a good return the complaint is he doesn't pay enough. This is a Rat line of attack. We should be rejoicing that we have been so blessed to live in a country where the opportunity exists to become incredibly successful. For all of you who want to attack Romney on the money side think about the other side of this sword.
Newt made an incredible amount of money because he had influence at the highest levels of power in our govt. Was Newt wrong to use his greatest assets to make money after he left govt employment? I don't think so. Should we attack Newt because he made a lot of money and "should have paid more" in taxes? I don't think so.
Yep, to what you both said....but, I don’t think we should forget about the Prior tax....and, I’m not at this time a Romney supporter...
I can't believe I'm reading this stuff at FR.
Risk, risk, risk. Your strawman assumes that all investments go up in value. However, if the investment goes bad the margin gets called. If an investment loan goes bad, for whatever reason, the principals are liable if it's a recourse loan, or the banks are if it's a non-recourse loan. IOW, no one gets free money.
If we want to argue that failure is a key regulator of a free economy I'm with you 100%. The problem with TARP was it broke the chain of responsibility.
Romney's business practices have opened my eyes to realize that there is a huge tax disparity in the treatment of people who toil and sweat for a living and those who live off the toil and sweat of others.
So the guy who puts a huge enterprise together, which employees a lot people, isn't working really hard?
I won't vote for Romney under any circumstances, but it's not because he has been successful in business.
I did not say that Newt or I should have paid “more” in taxes. I said that anything given to an employee is the 1st tier income and all first tier income should be taxed at the same rate.
The value of the stock given should be totaled on the day it is given, and that is the first tier income.
If they give a 1000 shares at 60 bucks, then you just received 60,000 dollars and should pay “income tax” on that 60,000.
If that 60 grand happens to bring 10% that year, then the 2d tier tax of 15% should apply to that 6000 bucks.
That’s what I said.
I’ve read at times of CEOs who receive a million shares of common stock (or preferred). That is 1st tier income.
I guess I should have quit engineering school and become a historian where you can make $1.6 million a year working for Freddie Mac.
YES!
A HOUSEHOLD should be considered a business and all costs of operating that business should be non-taxable, the same with other businesses.
That way all gasoline, school fees, food/clothing/shelter, lunches, etc., and are deductible.
What would then be taxed is that amount of money left which we will call profit. Profit should be taxable for a HOUSEHOLD the same as for any other enterprise...and EXPENSES should not be.
That will make the rulers of the nation sprint — not walk — to their nearest sales tax plan.
9-9-9 would have solved all this
I’m Hermon Cain and I approve this messge
9-9-9 would have solved all this
I’m Hermon Cain and I approve this messge
I liked 999....IF (IF...did you notice the IF) it could all (each of the 9s) be implemented at exactly the same time.
I even liked Enterprise zones, rather then fed govt funds going to cities, Fed would take less from them.
Nothing the individual receives, other than legitimate business expenses incurred by an employee, should be considered other than personal income, taxable at the 1st tier rate.]
Sigh. It has nothing to do with an individual in a corporation. It has to do with owning the company's stock whether you are an employee or not. All common stock owners pay taxes based on the same rules.
Suppose for example, that you and another person go into business, and set up a C Corporation. The business will pay the owners share of the taxes based on net income of the company(whether you get a distribution or not).
If the company has enough funds left after taxes, it may make a distribution in the form of dividends. As owners your company has already paid the income taxes, before distribution, and you pay additional taxes on the distribution(dividends).
If this had been a partnership, you would pay the income taxes owed, but there would be no additional taxes for whatever money was leftover that you and your partner split. Likewise, a sole proprietor would pay the taxes, and whatever was left would recieve no additional taxes.
All common stockholders are actually part owners of the company whether they work in the company or not. The IRS makes sure it gets the stockholders share of the income taxes owed by taxing the corporation at a corporate rate of around 30% to 35%. Then they turn around and assess additional taxes on distributions(dividends).
If you work for a company, you are paid wages/salary and pay individual taxes on that. If you also own shares in the company, you will also pay taxes for that ownership based on the rules outlined above.
I didn’t say he did anything wrong. I said the taz code is unfair.
Are you a socialist?
They are channeling Warren because they think it helps Newt. His anti capitalist rants have found an audience here at FR. It matters not a whit that corporate profits are taxed at 35%, higher than the Euro socialists, and then the dividends are hit at 15%. What matters is Newt. Kind of funny in a sad way.
I'm surprised some FRiends I've posted with over the years have bought into this argument. As a business owner I've never seen "the working man" in the office with me on sat. night or sun. morning trying to figure out how to make the cash flow work.
I'm with you 100%.
I guess I should have quit engineering school and become a historian where you can make $1.6 million a year working for Freddie Mac.
This is what is so irritating about this argument. When Newt was attacked for making a living using his most valuable asset (his connections & influence) I defended him. He broke no laws and his clients got what they paid for. He has every right to be as successful as he wants to be just like anyone else.
I would love to see the income tax eliminated and replaced with a sales tax. Maybe it would lessen the class warfare.
Well my parents and grandparents were small business owners. I went to college, and wound up with a career in finance at one of the largest companies in our State.
What little business/economics is taught in High School is totally voluntary. We don’t teach the history of finance either. It leaves a lot to be desired. Citizens need to understand this stuff in order to vote intelligently.
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